Part A:

Need help with part B

Part 2: The following differences enter into the reconciliation of financial income and taxable income of Abbott Company for the year ended December 31, 2010, its first year of operations. The enacted income tax rate is 30% for all years. Pretax accounting income Excess tax depreciation (temporary difference) Litigation accrual (temporary difference) Unearned rent revenue deferred on the books but appropriately $700,000 (320,000) 70,000 recognized in taxable income (temporary difference) Interest income from New York municipal bonds (permanent difference) Taxable income 50,000 (20,000) 480,000 1. 2. 3. 4. Excess tax depreciation will reverse equally over a four-year period, 2011-2014 It is estimated that the litigation liability will be paid in 2014 Rent revenue will be recognized during the last year of the lease, 2014. Interest revenue from the New York bonds is expected to be $20,000 each year until their maturity at the end of 2014. Instructions (a) Prepare a schedule of future taxable and (deductible) amounts (b) Prepare the journal entry to record income tax expense, deferred taxes, and the income taxes payable for 2010. Show computations clearly and explain your answer. Credit will not be given unless sufficient computations are shown. 2011 2012 20132014 Total future taxable (deductible amount) depreciation litigation unearned rent 80000 80000 80000 80000320000 7000070000 -50000-50000